Pay Day Lending On the Way Out

Phoenix, AZ – Payday loans have been legal in Arizona for a decade, operatingunder a special exemption from laws which generally cap interestat 36 percent a year. The fees on the two-week loans can hit$17.85 for every $100 borrowed, which translates out to an APRnorth of 400 percent. Only thing is, that exemption expires June30. Voters rejected an extension two years ago as did lawmakersearlier this year. And a last minute offer of loans at a somewhatlower rate didn't fly. That means no more payday loans beginningin July. The move is a victory for Sen. Debbie McCune Davis whosaid Arizonans don't need the short-term high interest loans.

(What will replace it will be loans through lenders with whomthey have relationships. And they will help people getappropriate loans and help them work their way out of debt.)

That still leaves the question of what happens to those who don'thave a regular relationship with a bank or credit union.

(That's not the issue here. What we're talking about is peoplewho do have relationships with lending organizations,particularly credit unions, who will make products available.)

The move doesn't necessarily mean all 650 sites making paydayloans will shutter. Some offer other services like check cashingand vehicle registration renewals. For Arizona Public Radio thisis Howard Fischer.